The firm recently released its fourth annual Investor
Insights Survey, finding that U.S. investors are showing more trust in the investment
markets and have set more aggressive investment targets for the year ahead.
Natixis researchers say this is a positive sign about the overall health of the
economy, but the firm warns that many investors still lack a sound savings and
investing plan to help achieve long-term financial goals.

Survey results show investors are beginning to fall into two
groups, Natixis says. One is stuck at an impasse between competing desires for
growth and stability; the other is at a turning point, ready to reset its
expectations and approach to investing.

“Many investors have set aggressive investment targets, but
don’t have a realistic way of reaching them,” says John Hailer, CEO of Natixis Global Asset Management in the Americas and Asia.
“Something has to change. The markets have reached new heights, and investors
feel generally comfortable about portfolio performance. But without a plan that
incorporates individual risk and personal benchmarks, the odds are diminished
that investors will meet their goals.”

According to the survey, Americans say they need average
annual returns of 9.8% above inflation to meet long-term discretionary, housing
and health-care spending needs. This is an ambitious goal that could drive
investors to take on more risk than they can handle, Hailer notes.

“With
average yearly inflation of 4.2% since 1964, these investors would actually
need to earn 14% to meet their needs, surpassing the 10% average annual gain of
the Standard & Poor’s [S&P] 500 Index over the past 50 years,” he says.

Other survey results show the typical U.S. investor is still
somewhat confused and conflicted about how to approach retirement investing,
Natixis says. For example, while more than seven in 10 (71%) investors say
asset growth is increasingly a priority over principal-protection, 56% also say
they are only willing to take minimal risk to achieve high returns. Additionally,
just one-quarter of investors surveyed feel their overall investment knowledge
is “very strong.” Even fewer (12%) say they have strong knowledge of
alternative investments,which are not correlated to the broader market and are
increasingly becoming part of retirement and retail investor portfolios.

“This demonstrates a great opportunity for financial advisers
and the industry to help educate investors on realistic expectations and
strategies to reach their goals,” Hailer says.

When they do make investment decisions, more than
three-quarters (79%) of investors say they simply follow their gut instinct.

“Fifty percent have no clear investment goals and 54% have
no financial plan,” Hailer observes. “So it’s not surprising that when asked
how they define investing success, some look at asset levels and others look at
comfort level, rather than meeting long-term financial goals.”

The
two top indicators investors rely on to measure investment performance are the
current level of their total assets (50%) and the financial comfort level (49%)
currently felt. Less than four in 10 investors (37%) say they consider
long-term financial goals in defining investing success—the strategy Natixis
says is best for retirement investors.

Other findings in the annual survey show that market volatility
has eroded confidence for nearly half of investors (49%), and six in 10 no
longer believe traditional asset-allocation strategies that rely solely on a
mix of stocks and bonds are the best way to pursue returns.

“Investing today is complicated, and there’s a lot of noise
in the market,” Hailer says. “But investors are beginning to understand that
market indexes may not be the best benchmark for their personal success.
They’re looking for a better strategy to help them stay invested for the long
term.”

In what could be a turning point in investor behavior and
expectations, Natixis says, 82% of investors are willing to set a target for
investment returns that is independent of overall market returns. Americans
also seem to be growing more aware of the risks of having too little income to
meet their needs in retirement. Their biggest concern observed by Natixis is
the uninsured cost of long-term care in old age, which 53% of investors
identify as a top risk to their financial security in retirement. This is a
substantial increase from 40% in Natixis’ 2013 survey of individual investors.

Asked
where they would turn if their retirement funding fell short, 46% of Americans
say they will continue to work and 31% would rely on support from family
members. Only 19% expect to be able to rely on the government, a reflection
that Americans are beginning to accept the reality that they will be
responsible for financial security in retirement.